I am not sure how you are tying that into this as I am talking about government regulation concerning supposed externalities and making the market for firearms less efficient by qualitative measures.

Herein lies the rub. Who's to set the market price that is deemed sufficently high enough to keep firearms out of the criminal elements hands? Could S&W be trusted to price their firearms high enough to keep a part of their customer base from affording them? Doubtful. So, that leaves the government right. So the government says, would a starting price of $250 for any gun keep firearms off the streets? Doubtful. How about $1000? Maybe. How about a $10,000? Most certainly.

Setting an artifically high price that is used to eliminate certain targeted demographics would be dangerous. After all, who has the final say on what demographic shouldn't allowed to own guns? Your target demographic might be vastly different that Eric Holders.